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US-Promoted Trade Deals Signal the End of WTO Primacy

The primary reasons for WTO failure were that western countries, particularly the United States, sought to write rules that would favor its own large corporations, without leaving enough room for third world countries to develop their own economies.

A US-China trade partnership is not possible today because the terms on which the United States would like to make trade agreements are themselves not very acceptable to many countries, Prof. Radhika Desai, professor at the Department of Political Studies and Director at Geopolitical Economy Research Group, University of Manitoba in Winnipeg, Canada , told valdaiclub.com. That, according to Desai, is partly why China is making its own trade partnership with other countries.

“China is not having any problems with getting other countries to agree to its trade agreements, it has a very large set of agreements already,” Desai said.

Desai noted that apart from countries like Australia, New Zealand, Canada and the United States, the only nations that have joined the TPP in what Desai called “the allegedly very fast-growing part of the world,” are Malaysia, Vietnam, Brunei and Singapore, which are quite small economies. At the same time, China is not part of it, and neither are South Korea, Thailand or Indonesia. At the same time, the new trade agreements are being made within the broader context of the failure of the WTO.

“The attempt to work with that global framework the WTO created has failed and the Doha Development Round was put to rest by all countries concerned, because there were too many fundamental disputes between advanced, that is to say rich countries and the developing countries including China for there to be any global agreement,” Desai said.

Desai noted that the WTO tried to create a sort of single global trade agreement. The primary reasons for its failure, however, were that western countries, particularly the United States, sought to write rules that would favor its own large corporations, without leaving enough room for third world countries to develop their own economies, in particular on issues such as intellectual property rights, trade in services, etc. The other main reason was that first world countries failed to offer sufficient concessions on issues of agricultural subsidies.

“They want to continue to subsidize their own agriculture and protect it while asking other countries to open up their agriculture to competition from abroad,” Desai said.

Many countries are trying to create regional agreements, while the United States is presenting the TPP as an alternative to China, according to Desai. Today, all countries concerned have the power and the capacity to write the treaty rules that they would like because there is no global trade agreement. In addition, different countries have the freedom to join or not join the trade agreements on their choice, as well as join trade agreements with countries with which they have a large degree of agreement about what kind of rules to write. She made the example of rules that would threaten jobs in the country, or could threaten particularly important sectors of the economy.

“These are the things that are ever present in the minds of all trade agreement negotiators. Because there is no overall agreement, countries can go ahead and make their own rules which are compatible with the economic goals that they have for their own countries and their own national economies,” Desai said.

Radhika Desai added that this shows that the United States’ ability to influence countries is also going down. She concluded that because China is an economic heavyweight now, one could understand why smaller-sized countries in the regions would choose China over the United States, when it comes to making trade deals. China, after all, has greater economic momentum, and is willing to make trade deals, which allow countries to have certain types of protection.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.